The UAE's largest banks extended their profit growth in nine-month results, even as the cost of funding emerges as the main concern heading into the fourth quarter. First Abu Dhabi Bank (FAB), Emirates NBD and Abu Dhabi Commercial Bank (ADCB) — the country's three biggest listed lenders by market value — all reported higher nine-month profits than a year earlier.

FAB's nine-month profit rose 3 per cent, with its net interest margin improving 5 basis points to 1.93 per cent; loans grew 10 per cent since December and deposits rose 5 per cent. Emirates NBD's nine-month income climbed 15 per cent to a record Dh42.2 billion, with lending up 18 per cent excluding its RBL Bank acquisition and deposits up 12 per cent. ADCB's nine-month profit jumped 27 per cent, with non-interest income up 21 per cent.

Among other lenders, Abu Dhabi Islamic Bank (ADIB) posted a 6 per cent rise in nine-month profit to Dh5.6 billion as financing expanded 25 per cent. Dubai Islamic Bank (DIB) reported 7 per cent higher gross revenue, while at Mashreq, customer loans grew 33 per cent and impairment charges reversed to a net release.

Asset quality improved at most major lenders, with non-performing loan ratios falling to 2.1 per cent at FAB, from 2.6 per cent, and to 2 per cent at Emirates NBD. FAB's CET1 capital ratio stood at 14 per cent, while ADIB is planning a Dh1.75 billion rights issue.

Nagham Hassan, a market analyst at eToro, said loans grew faster than deposits at all four banks, and the price of funding will be one of the biggest swing factors for fourth-quarter profits.